The USDA will roll out its latest production report this coming Monday, and farmers and analysts alike are hoping it provokes some market action to the upside.
Scott Shelladay, host of The Cow Guy on RFD-TV, says that next week’s report will be crucial to grain market moves, markets that have been weathering news of rail and port strikes and canal closures without a significant impact on prices. That may change, finally, with next week’s numbers, he says.
“We’re coming to terms of the fact that it just wasn’t a very good year [for prices], and what are we going to do about it next year, and what are the input prices going to be looking like, and and I think that’s pretty difficult,” he says.
There have been and will be some small opportunities, Shelladay says, as the market’s been trying to pop a little bit, but it’s trying to pop in the middle of harvest season, which is a difficult thing to do, too. “That’s going to take a little bit of a the lustre off that trade as well,” adding that markets are likely to continue sideways here while the bulls wait for something to go their way.
He adds that the market is not acting like it used to, with unexpected price movements influenced by money flows and psychological factors. Shellady says that farmers need to keep an eye on that magical $4 corn figure, and not to get too hung up on what corn was two years ago.
“I don’t know if it’s because we have so much of the new money fund business in the market, but [the market] doesn’t act like things used to act when I was getting in the business in the early 1980s. You used to have a much better roadmap about how things were going to trade. Now, it can be hot and dry and corn can be limit lower, because somebody needs to liquidate positions to take some money elsewhere,” he says, and that can be hard on the mental space when trying to make marketing decisions. (Article continues below the player)
To complicate matters, there’s large-scale economic moves at play here, like big government spending and surprisingly large rate cuts, and something stinks, Shellady says.
“We’re cutting rates at bigger clips than we thought we were going to with the equity market all time, record highs, right? That doesn’t make sense. Every market pundit is going to gloss over that and they’re going to tell you this: ‘Well, the economy is not the stock market. The stock market’s not the economy’…But they’re just wanting to forget about all the bad stuff and look at the good stuff and look at how high the equity market is,” and that’s not a good thing, Shellady says.
The ballooning government debt and big spending right now looks a lot like “doom spending” to Shellady, where when the pervasive mood is, ‘well, we’re sunk anyway, may has well enjoy my time,” people (and governments) don’t make the best financial decisions.
“Something is afoot underneath us. I can’t quite put my finger on it, but it stinks. You don’t cut rates as aggressively as we did, or any other country, and with stock markets at all-time record highs. That tells me something, because if you want to use the argument of, well, the stock market’s not the economy. Well, there’s been times where the stock market’s been on its knees and the economy’s been flying high, and they don’t use that rationale, then it’s only when the stock market’s high. So I think it stinks. I really do.”
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